Business Daily from THE HINDU group of publications
Thursday, Jul 13, 2006
Business Daily from THE HINDU group of publications Thursday, Jul 13, 2006 |
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Corporate
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New Projects Marketing - Retailing Industry & Economy - Petroleum MRPL unwilling to step back from retail biz foray Richa Mishra
No looking back MRPL gets no compensation for under-recoveries To discuss issue Ministry officials on July 15 Has marketingrights for 500 outlets
New Delhi , July 12 After considering the Government suggestion to revisit its foray into the retail business of petrol and diesel, MRPL is of the view that stepping back at this juncture would not be in the interest of the company. At the quarterly review meeting of ONGC on July 6, the Petroleum Ministry had asked the company to rethink on its retail plans as the business was not very lucrative with under-realisation of Rs 6 per litre on both petrol and diesel due to scaling international crude prices. Besides, the subsidy available to oil marketing companies such as IOC, HPCL, and BPCL would not be extended to ONGC and MRPL. Sources told Business Line that at the meeting MRPL had conveyed to the Ministry that the company has already made business plans and investments and to stop them now would not be in its best interest. The issue is expected to come up again on July 15 at a meeting with the Ministry officials, they added. Since the retailing business in the petroleum sector was opened up on April 1, 2002 the Petroleum Ministry has granted marketing rights to Reliance Industries Ltd for close to 5,849 outlets, Essar Oil (initially 1,700 outlets), Shell (2,000), ONGC (1,100), MRPL (500), and Numaligarh Refinery Ltd (510). ONGC, MRPL and Numaligarh are being treated at par with private sector companies RIL and Essar. Therefore, they would have to fend for themselves without any subsidy. RIL and Essar have been requesting the Petroleum Ministry to treat them on par with State-owned companies while working out a compensation policy for retail companies for the losses that they incur in selling these products below cost price. The State-owned companies are compensated by the Government for similar under-recoveries with oil bonds or discounts from upstream companies, but no such mechanism is available for private and some State-owned companies. Last year, MRPL joined hands with Ashok Leyland to set up petrol stations to distribute petroleum products and provide servicing facilities for trucks through a joint venture. To avoid any conflict of interest with ONGC outlets, it was planned to position MRPL lower in the retail value chain.
More Stories on : New Projects | Retailing | Petroleum
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